German Unions Push for €350 Billion Wealth Levy as Coalition Faces Tax Reform Deadline

Tens of thousands of workers are expected to converge on Darmstadt on June 20, as the German Trade Union Federation (DGB) mobilises against feared social spending cuts and demands a radical shift in tax policy. The protest comes just days after a high-stakes meeting between coalition leaders, unions, and business associations scheduled for Wednesday to hammer out a long-awaited reform package on taxes, pensions, and healthcare.

At the heart of the DGB’s proposal is a one-time wealth levy targeting the country’s richest households. Under the plan, the top 0.1% of households — those with net private assets exceeding €10 million — would pay a 10% surcharge, spread over 20 years. The union estimates this would generate roughly €350 billion for the federal government. On top of that, the DGB wants to reintroduce a regular annual wealth tax, starting from net assets of €1 million.

The revenue would be used to cut income taxes for the vast majority of workers. According to the DGB, 95% of employees would see their take-home pay rise. The basic tax-free allowance would jump to €15,400, while the top marginal rate would climb to 49% for taxable incomes above €88,800. An additional “rich person’s rate” of 52% would kick in at €140,000. To put that in concrete terms: a single person earning €4,000 gross per month would save more than €53 monthly. Child benefit would increase from €259 to €290 per child, though the existing child allowance and the tax classes III and V — which currently favour dual-income couples with one high earner — would be scrapped.

DGB leader Yasmin Fahimi launched a blistering attack on the government’s current reform trajectory. She argued that the administration’s fixation on austerity and spending cuts is economically misguided, warning that it depresses domestic demand. Instead, she called for targeted relief for companies that invest.

Business groups were quick to push back. The Cologne Institute for Economic Research (IW) warned over the weekend that the plan amounts to “an attack on Germany as a business location” and risks triggering capital flight. The Taxpayers’ Association of Germany, meanwhile, proposed that the top income tax rate should only apply to earnings above €100,000 and urged the government to cut spending by up to €50 billion.

But the DGB’s ideas have drawn support from an unexpected corner. Marcel Fratzscher, president of the German Institute for Economic Research (DIW), advocates a 2% wealth tax on large fortunes — a measure he calculates could raise nearly €42 billion annually. His reasoning: Germany currently taxes labour much more heavily than capital or accumulated wealth.

On the political front, the ruling coalition is racing to finalise a package of decisions by July 1. SPD parliamentary leader Matthias Miersch dampened expectations of a quick deal, telling reporters that negotiators still face significant gaps. Labour Minister Bärbel Bas has insisted that any income tax reform, slated for January 1, 2027, must deliver at least €500 in annual relief per worker. She is also pushing for a universal pension insurance system that would include civil servants, the self-employed, and members of parliament — a proposal that remains deeply contentious. A commission on pension reform is expected to table its recommendations by mid-June.

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